1. In August 2000 the Royal Society and
the Royal Academy of Engineering established a working group,
of which I was Chair, to assess the role of European renewable
energy policy in reducing anthropogenic emissions of greenhouse
gases. This study was prompted in part by the European Commission's
(EC) proposed Directive on the promotion of electricity from renewable
energy sources in the internal electricity market (RES-E Directive).
The working group considered information provided by over 40 individuals
and organisations with expertise in energy policy issues. Of particular
relevance to your inquiry, we attempted to assess the UK's ability
to meet the 10 per cent target for the generation of electricity
from renewable sources by 2010 proposed by both the UK government
and in the draft EC RES-E Directive. We considered both economic
factors, such as the impact of the new Renewables Obligation,
and implementation barriers, such as planning requirements and
the scale of build. However, it was clear that much could be achieved
if appropriate economic instruments were in place. I have summarised
the key findings of our study in the sections below. Further details
are provided in our final report The role of the Renewables
Directive in meeting Kyoto targets[24].

IMPORTANCEOF
RENEWABLE ENERGY

2. Our report focused on the role of renewable
energy in reducing the emissions of greenhouse gases and thus
meeting the UK and European Union's Kyoto commitments. The importance
of achieving such reductions has been highlighted by the recent
report from the Intergovernmental Panel on Climate Change[25]
that suggests that global surface temperatures could rise by up
to 5°C by 2100 and which finds increasing evidence for a
human influence on global climate. On this trajectory the environmental
impacts could prove to be extremely serious well before the middle
of the century.

3. Renewable energy sources have the advantage
of either not emitting greenhouse gases (eg wind, solar, tidal)
or being essentially greenhouse gas neutral (eg biomass crops
that emit no more carbon dioxide in the electricity generating
process than they have absorbed during their growth). In addition,
renewable energy can have a role in increasing security of supply
and can provide an important contribution to sustainable development
as reserves of fossil fuels decrease. Although beyond the scope
of your enquiry it is perhaps worth adding that these advantages
apply also to nuclear energya topic on which we reported
in June 1999[26].

IMPACTOF
RECENT GOVERNMENT
REFORMS

4. Our study concluded that the introduction
of the correct economic instruments is the single most important
factor controlling the sustainable growth of renewable technology.
There is widespread concern that the economic instruments that
are currently proposed in the UK will prevent the renewables industry
from developing at the rate necessary to reach the Government's
10 per cent target. Under the new Renewables Obligation (incorporated
in the Utilities Act 2000) and associated Renewables (Scotland)
Obligation, electricity suppliers will have to supply a proportion
of their electricity from renewable sources or purchase the equivalent
number of "green certificates" from others who have
supplied power from renewable sources. However, suppliers who
are unable or do not wish to provide the required proportion of
electricity from renewables can "buy-out" their obligation,
essentially pay a fine. The level of this buy-out price is critical,
as it will set the maximum market price for renewables. At the
time of our report indications were that it will be set at 3 pence
per kilowatt hour (p/kWh). This is judged to be too low to encourage
the more expensive technologies such as offshore wind that will
almost certainly be necessary to meet the UK's 10 per cent target.
In contrast, the non-fossil fuel obligation (NFFO) previously
employed in the UK operated a banded pricing scheme to reflect
the different costs of the various technologies. NFFO also provided
contracts of up to 15 years, a factor that offered a level of
security to potential investors. In this respect therefore recent
government reforms appear to have reduced the incentive for embarking
on the more expensive technologies.

5. The situation for the renewable industry
in the UK is further complicated by the New Electricity Trading
Arrangements. It would appear to discourage some renewable energy
schemes (wind, tide, solar) as a consequence of their variability
of supply and thus their inability to guarantee to supply a contracted
amount of electricity within the specified period.

6. The primary aim of any economic measures
should be the reduction of greenhouse gas emissions. The most
direct economic approach is to introduce a cost for such emission,
namely a tax on the quantity of carbon emittedan upstream
carbon tax on primary fuels. In fact the current framework of
UK economic instruments which includes the Renewables Obligation,
the Climate Change Levy (a tax on energy usage irrespective of
whether it has involved the emission of greenhouse gases) and
some complex rules on what is eligible as a "renewable"
source[27]
amount to an attempt to micromanage complex aspects of the whole
economy. One can understand how these economic instruments have
evolved, but the prospects of success are no better than associated
with other attempts to introduce a command economy. A carbon tax
cuts through this complexity; it has a direct impact on what needs
to be controlledthe emission of greenhouse gases. It is
the approach which has been recommended by almost every group
that has studied these issuesmost recently the Royal Commission
on Environmental Pollution[28].

7. The key problem with economic instrumentsand
the carbon tax is no exceptionis that it is exceedingly
difficult to implement in a single country. We have seen how differences
in the price of diesel between ourselves and France can cause
enormous social stresses. Whilst there is no environmental reason
for general tax harmonisation, we regard the convergence to international
agreements on economic instruments designed to reduce carbon emission
as absolutely essential. It is important to appreciate that the
level of carbon tax needed to encourage a number of renewable
technologies is not enormous. As also demonstrated in a recent
DTI report[29]
a tax equivalent to one penny per kilowatt hour would provide
a very considerable incentive.

PLANNING REGULATIONS

8. Information provided to our working group
suggested that planning regulations are a major barrier to new
wind energy generatorsprobably the most promising of the
renewables in the immediate future. There is evidence that the
information available to planning committees is not always up
to date. In the case of wind farms noise and visual intrusion
are often cited as reasons for denying permission. Technology
has progressed and can now mitigate much of the objection on the
count of noise. We would welcome any initiatives that promote
a better understanding of all the issues pertaining to renewable
energy generation among the wider community.

9. Sufficient levels of funding of research
and development are crucial in ensuring sustained growth of renewable
technology, with the correct balance depending on the technology
in question. Wind turbines, for example, no longer require core
research funding but do require investment in development to reduce
manufacturing, production and installation costs. They also need
funding for demonstrators for large off-shore installations[30].
Our report recommended that investment in this area be increased.
We also stressed the importance of using the results from energy.
R&D programmes to inform the development of government policies
in this area. There are examples of this practice within the European
Commission[31].

OTHER POTENTIAL
BARRIERSTOTHE GROWTHOF RENEWABLES

10. In addition to the barriers presented
by economic factors and authorisation procedures, issues of scale
of build and integration into the grid should also be considered.

11. Our working group was concerned that
the sheer scale of the implementation required will place a significant
strain on the engineering and manufacturing industry. In order
to meet the 10 per cent target a significant change in the rate
of building and commissioning renewable energy installations is
required. With current technology and available equipment, respondents
assumed that most of the UK's indicative target would have to
be met by increasing the amount of wind generation. The scale
of generation needed (in the order of 39-44 TWh per year by 2010)
would require the construction and installation of between 3,000
and 5,000 new wind turbines over the next 10 years (in excess
of one per day). It is possible that, given economic viability,
industry could meet this manufacturing challenge. However there
must be some doubts as to whether the planning and sociological
issues would allow this rate of development.

12. Integration into the UK's national grid
has been a potential obstacle for many renewable generators. We
recognised that the geographical areas which offer the most potential
for renewables are often remote from suitable grid connection
points. Additionally, many are in the north of the country where
connection will imply additional costsadding to the already
significant North-South movement of power. Whilst granting priority
access (as advocated in the draft EC RES-E Directive) can ameliorate
this disincentive, it is unclear who will fund the requisite upgrade
of the distribution systems. While we were reassured by a number
of respondents that the distribution systems can cope with at
least 10 per cent of renewable generation (including variable
sources), there were concerns that the quality of supply may decline
in terms of the stability of the frequency and the presence of
harmonics.

VALIDITYOF
PERCENTAGE TARGETS

Finally, our working group felt that the reliance
on targets expressed as a percentage of the total electricity
consumed is flawed; it is not a direct measure of the success
which attends our efforts to reduce carbon dioxide (CO2)
emissions. The Kyoto Protocol uses 1990 emissions figures, quoting
an equivalent mass of CO2 as a baseline. However the
reduction of CO2 emitted by generating a percentage
of electricity from renewable sources will depend on the total
demand for electricity and on the origin of the electricity. For
example, a requirement for 10 per cent electricity from renewable
sources in a scenario of increasing electricity supply would leave
90 per cent of the increase being supplied from other sources
and thus the potential for an increase in emissions to the environment.
In the UK, at least, electricity supply is still rising[32].
Similarly, a reduction in the electricity supplied from non-CO2
emitting sources, such as nuclear power, and its replacement with
electricity supplied from renewable sources would result in no
net change in emissions. In our report we recommend that targets
be set in terms of a maximum mass of CO2 emitted from
electricity generation would be more appropriate.